Lead, aluminium, arsenic, barium, boron and nickel were also detected in the aquifer at high levels.

It was found the previous owner of the project in the Pilliga Forest, Eastern Star Gas (ESG), had not followed strict guidelines when building the pond.

Storage ponds are designed to hold the waste water and brine produced when gas is extracted, however it was found the pond liner was of “poor quality” which resulted in the integrity of the liner being questionable.

EPA chief environmental regulator Mark Gifford said the metals found are not additives and occur naturally in the surrounding soil and water.

''However, the leaking pond has mobilised the elements and moved them into the aquifer, increasing their concentrations,'' Gifford said.

''Importantly this water is not used for livestock, irrigation or human consumption.''

The EPA ordered Santos to ensure the ponds are “secured and adequately maintained'' so the pollutants to do not spread.

Santos said the site’s water treatment plant was developed by ESG and shut down in December 2011 when Santos took over.

The company said it had continued to rehabilitate the area around the Bibblewindi ponds and was transferring water to a new plant being constructed at Leewood.

However environmental groups and the state opposition are calling on the O’Farrell government to walk away from an agreement with Santos to fast track the development of the CSG project.

Signing a MOU two days after the EPA fined Santos, the government has guaranteed to make a final decision on the project on January 23, 2014.

"The MoU (Memorandum of Understanding) should be torn up in light of the contamination," Labor environment spokesman Luke Foley said.

"This contamination of the water aquifer is highly alarming."

NSW Greens MP Jeremy Buckingham said contamination of the aquifer was ''game over for coal seam gas''.

''It's scandalous that the government knew of this serious contamination incident when they announced the MOU to fast-track the Narrabri project and when the Premier downplayed concern about the toxic risk associated with CSG on radio.''

While the Wilderness Society’s national director, Lyndon Schneiders, argued no groundwater is safe from coal seam gas operations.

Schneiders called on federal Environment Minister Greg Hunt to stop all CSG operations nation-wide ''until there is a full independent and transparent investigation into the industry''.

''We now have proof that coal seam gas mining contaminates groundwater and aquifers, flying in the face of the industry's claims